The Upside to Bail Losses

In the bail bond business paying a loss as a result of an inability to recovery a fugitive is a sign of failure.  Paying bond forfeiture losses can be attributed to underwriting, a lack of experience, initiative and simply bad luck.  A loss can be damaging financially and could even put a bail agent out of business.  Even with a loss there can be a silver lining.

How many of us working in the bail industry have been told by legislatures, law enforcement and adversaries that bail agents don’t have to pick up defendants who fail to appear because law enforcement does this for them?  This may be the single most misrepresentation perpetrated on our industry.

I have underwritten thousands of bonds over the years and several of those bonds have forfeited when the defendant failed to appear.  Most were resolved in short order and then there were those that seemed impossible to locate and proved impossible to resolve resulting in a loss.  Unfortunately, law enforcement did not come to our rescue in those situations.

A couple years ago, a bill was introduced in the Colorado legislature that would have expanded the use of taxpayer funded pretrial services and introduce a deposit bond option.  If this bill had passed it would have put a significant number of bail agents out of business.  In order to derail this legislation, the coalition of bail agents and sureties had to come up with a way of showing a significant negative fiscal impact on the State of Colorado should the bill pass into law.

We know, and it has been demonstrated time again, the commercial bail industry operates at no cost to the taxpayers.  What is not often mentioned is the revenue generated in favor of counties and states from the writing of bail.  Revenue comes in the form of licensing fees, losses and premium taxes.

All surety companies and bail agents operating in Colorado were asked to submit figures for losses, licensing fees and premium taxes paid in the previous two years.  These figures were submitted to a central source where they were compiled and presented to the legislative committee at the appropriate time.  It was determined millions of dollars are paid annually in the form of losses, fees and premium taxes.  To reduce or eliminate private sector bail agents would have a negative fiscal impact on the State of Colorado.  That bill did pass.

On many occasions since that time in Colorado, surety companies and bail agents have produced their loss numbers to demonstrate to a legislative body the positive fiscal impact commercial bail has on a state’s revenue.  Even though bail agents resolve 99% of their forfeitures, an obvious win for public safety and victims of crime, the state still wins by receiving revenue from losses paid in those rare occasions when a bail agent is unable to perform.  Even when a bail agent looses, the state wins, something taxpayer funded pretrial services cannot proclaim.

The next time you are asked by your surety or state association to provide your paid loss information, know that agonizing loss could have an upside and contribute to saving your profession.